What Is an Umbrella Mortgage?

Get the money you need with an umbrella mortgage. (Image: money image by cherie from Fotolia.com)

Umbrella mortgages provide homeowners with the unique opportunity to combine several loans into one payment. This way, they can save money by financing several expenses against one asset.

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Amount

The amount an individual can borrow in an umbrella mortgage is based on the value of their home. Most companies that offer umbrella mortgages allow a client to borrow between 75 and 90 percent of what their home is worth.

Combined Expenses

With this plan, homeowners can combine expenses like a mortgage, car payment or student/personal loan into one lump sum. Borrowers then send one monthly payment to the lender.

Access to More Money

The umbrella mortgage plan comes with a couple benefits. It allows homeowners to access the value of their home to take out loans they may not normally be qualified for. This gives families the opportunities to start small businesses, send children to college, buy a new car or take on another expense they could not otherwise afford.

Saving Money

Another benefit of the ummbrella mortgage is that it saves homeowners money because they are only charged interest on a single loan rather than multiple loans from different companies. This program also provides the advantage of one convenient monthly payment for what would normally be several bills.